London Bridge Signs Up a Big REO Client

London Bridge Group's mortgage banking unit, based in Atlanta, has added functionality to several products that will be highlighted at the company's exhibit hall display at this year's convention.

And coming off a massive, three-year refinancing boom, London Bridge executives hope that mortgage bankers are starting to take a breather and think about updating their systems. Already one major lender has chosen to work with London Bridge's REO management technology, company officials said.

While the company was announcing enhancements to its construction lending program just before the MBA convention, that's not the only talking point on London Bridge's agenda.

Jim Brown, chief technology officer for London Bridge's mortgage and e-commerce divisions, told MSN that more than half of all mortgage loans that go into default are serviced on the LenStar platform.

LondonBridge is introducing imaging to LenStar, responding to increased use of imaging among major servicers. LenStar already automates most communication between servicers and default vendors such as attorneys, but imaging will eliminate the need to actually mail mortgage note documents for lenders that use imaging technology to integrate it with LenStar.

In addition, Mr. Brown said LenStar contains workflow that allows lenders to ensure that foreclosure procedures are followed.

"The system makes sure that the attorneys adhere to regulatory guidelines, and the lender can always monitor that," he said.

LenStar is also integrated with BridgeLink, London Bridge's electronic network that allows lenders to order products and services such as broker price opinions, appraisals, title searches, and credit reports from participating vendors.

Mr. Brown said London Bridge has been doing a lot in the area of REO management, including signing up one of the nation's largest lenders to use its customized BridgeLink REO management system. Another large lender, Wells Fargo, already has been using a version of the system.

BridgeLink provides an XML-based service to connect lenders with service providers via a hosted application. The web-based workflow, known as BridgeFlow, can be built out to suit the needs of particular customers. It allows management of a network of REO Realtors, bidding, maintenance, rehabilitation and other REO services.

"The Internet is the perfect platform to help a lender connect to 10,000 independent agents in the field," Mr. Brown said.

He said the BridgeLink REO service is easily adapted to meet different requirements or procedures that a lender may prefer.

"Mega lenders do things differently. They want to be able to program it to their specifications," he said.

He said it complements Fortracs, another default and REO management solution that is more of a canned software solution for lenders with fewer customization needs.

With lenders stressed out by heavy loan origination volume, electronic communication tools that save time and money from the process are increasingly important, Mr. Brown said. And he expects MBA attendees to be placing particularly high emphasis on this type of technology in the wake of the heavy lending volume they are experiencing this year.

Mr. Brown noted that some technology experts believe there may be pent-up demand for software products such as loan origination systems.

In the last few years, people have been too busy to think about migrating from one system to another, he said. That could bode well for technology vendors at the MBA show, he believes.

Just before the convention, London Bridge was scheduled to announce enhancements to its construction loan administration software, TCL. The new TCL will offer features that designed to enhance its appeal for lenders that manage commercial construction loans. Already, TCL is the most widely used program for servicing residential construction loans.

Jim Brown, chief technology officer for London Bridge's mortgage and e-commerce divisions, said that over the years, London Bridge has made a number of enhancements in response to customer feedback.

Mr. Brown said the updated version of TCL gives users more sophisticated ways to track borrower relationships and lines of credit.

For instance, the new TCL allows users to take advantage of "tiered pricing," a feature particularly popular among commercial construction borrowers. That allows borrowers to obtain different "tranches" at different interest rates. For instance, a base amount may be borrowed at prime, and once funds exceed that base a new tranche at a higher interest rate may be created.

Also, the new version allows "borrowing base credit lending," which allows developers and builders to draw, repay and redraw funds based upon the collateral value of a pool of assets rather than one individual asset.

Often, builders will use only 80% or 90% of a line of potential funds on one project, and many builders would like to be able to procure the remainder for other projects.

"What this does for the builder is free up some cash flow and some line of credit," said Shawn Maloney, TCL group executive. "This gives the bank the ability to offer flexibility to their clients."

In essence, borrowing base credit lending consists of a single maturity note established as a revolving line that allows a borrower to draw, repay and redraw based upon the collateral value of a pool of assets. A typical borrowing base may be in the $10 million range with 100 or more assets in the collateral pool. For TCL's customer base, the assets are typically construction loans, including lots.